| --- | --- | |-------------------------------------------|-------| | | | | EURONAV | | | | | | Q3 2022 EARNINGS CALL NOVEMBER 3, 2022 | | Forward looking statements 2 Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company's current views with respect to future events and financial performance and may include statements concerning plans, ...

COVID-19 Impact - The company reported a significant impact from COVID-19, resulting in additional costs of $1.2 million for crew changes and a revenue loss of $0.9 million due to off-hire days[571]. Market Conditions - The tanker market experienced a weak start in 2022, with ongoing oil supply issues and disruptions affecting overall demand[572]. - Current forecasts indicate that overall tanker demand is expected to rise above pre-pandemic levels in the following year[573]. - The company experienced a challenging financial performance in 2021, with VLCC and Suezmax freight rates trading at depressed levels compared to 2020[658]. - The oil market was in backwardation in 2021, reducing the need for storage and further impacting earnings due to high oil and bunker prices[659]. - The total shipping revenues and voyage expenses for 2021 were significantly affected by the economic slowdown and reduced oil transportation demand[656]. - The global demand for oil transportation is expected to increase by 4.6 million barrels per day in 2022 compared to 2021, with a return to pre-COVID levels anticipated[759]. - The tanker orderbook is measured, with VLCC and Suezmax orderbooks at 8% and 6% of the fleet, respectively[761]. Financial Performance - The company has maintained a positive EBITDA for 2021 and expects similar results for 2022 based on forecasted Time Charter Equivalent (TCE) rates[574]. - Total shipping revenues decreased by 65%, or $790.4 million, to $430.0 million for the year ended December 31, 2021, compared to $1,220.5 million for 2020[662]. - Voyage charter and pool revenues decreased by 68%, or $749.2 million, to $348.4 million for the year ended December 31, 2021, compared to $1,097.6 million for 2020[663]. - Time charter revenues decreased by 37%, or $41.4 million, to $71.3 million for the year ended December 31, 2021, compared to $112.7 million for 2020[663]. - Net gain on sale of assets decreased by 34%, or $7.7 million, to a net gain of $15.1 million for the year ended December 31, 2021, compared to a net gain of $22.7 million for 2020[669]. - Total vessel operating expenses slightly increased by 1%, or $2.3 million, to $220.7 million during the year ended December 31, 2021, compared to $218.4 million for 2020[672]. - Finance expenses increased by 4%, or $4.0 million, to $95.5 million for the year ended December 31, 2021, compared to $91.6 million for 2020[689]. - General and administrative expenses decreased by 13%, or $4.9 million, to $32.4 million for the year ended December 31, 2021, compared to $37.3 million for 2020[680]. - Depreciation and amortization expenses increased by 8%, or $25.2 million, to $345.0 million for the year ended December 31, 2021, compared to $319.8 million for 2020[686]. - Share of results of equity accounted investees increased by 110%, or $12.1 million, to $23.0 million for the year ended December 31, 2021, compared to a result of $10.9 million for 2020[692]. - Income tax benefit increased by 122%, or $2.4 million, to a tax benefit of $0.4 million for the year ended December 31, 2021, compared to an expense of $1.9 million for 2020[697]. - As of December 31, 2021, the company had $152.5 million in cash and cash equivalents, down from $161.5 million as of December 31, 2020[700]. - Net cash from operating activities for the year ended December 31, 2021 was $(25.3) million, a significant decrease compared to $969.8 million for the year ended December 31, 2020[704]. - Total indebtedness increased to $1,807.9 million as of December 31, 2021, compared to $1,375.5 million as of December 31, 2020[706]. - The company’s reliance on the spot market contributes to fluctuations in cash flows from operating activities due to exposure to cyclical tanker rates[704]. Asset Management - The estimated residual value of vessels has increased, leading to a projected $100 million reduction in depreciation expenses for the year ending December 31, 2022[590]. - The company has not recognized any impairment losses as of December 31, 2021, as the recoverable amount of each Cash Generating Unit (CGU) exceeds carrying amounts[574]. - The carrying values of vessels are subject to fluctuation based on market conditions, with no impairment required as of the last reporting date[595]. - The useful economic life of vessels is estimated at 20 years, with specific vessels in FSO service having an estimated life of 30 years[584]. - The carrying value of VLCCs as of December 31, 2021, is $2,347.5 million, an increase from $2,164.6 million in 2020[609]. - The total carrying value of the fleet increased to $2,967.8 million in 2021 from $2,865.3 million in 2020[609]. - As of December 31, 2021, six VLCCs had carrying values exceeding their market values by approximately $44.9 million[609]. - The estimated future cash flows for vessels with market value declines are expected to exceed their carrying values[608]. - The company has a total of 71.5 vessels in its fleet as of December 31, 2021, up from 69.5 in 2020[616]. - The company has four newbuilding VLCCs scheduled for delivery in 2021, with a total cost of $186 million[622]. - The company contracted three new Suezmax vessels for a total cost of $199.2 million, with deliveries expected in 2023 and 2024[623]. - The company has entered into agreements for eco-Suezmax newbuildings, with an en-bloc price of $113 million, due for delivery in January 2022[621]. - The company has not recorded any vessels as held for sale as of December 31, 2021[615]. - The company sold the VLCC V.K. Eddie for $38.0 million, resulting in a capital gain of $14.4 million after accounting for selling costs[625]. - The sale of the Suezmax Finesse generated a capital gain of $8.3 million from a net sale price of $21.0 million[626]. - In 2021, the company recorded a capital gain of $9.4 million from the sale of the Suezmax Filikon for $16.0 million[631]. - The VLCC Nautilus was redelivered as part of a sale and leaseback agreement, resulting in a capital gain of $4.5 million[632]. - A capital gain of $13.5 million was recognized in the first quarter of 2022 from the redelivery of three VLCCs under a leaseback agreement[745]. Sustainability and Regulatory Compliance - The company is focused on sustainability and the potential positive impact of increased demand for scrap steel on the residual value of its vessels[587]. - The company implemented advanced hull coatings on 35 vessels to improve fuel efficiency and reduce CO emissions[637]. - Variable Frequency Drives (VFDs) were retrofitted on 10 vessels to reduce electrical power consumption[639]. - The FAST platform has been implemented on 30 vessels, enhancing data-driven decision-making and performance monitoring[640]. - The Group entered into a $713.0 million sustainability linked loan with specific emission reduction targets, secured by 16 vessels, maturing on March 31, 2026, with an outstanding balance of $524.1 million as of December 31, 2021[720]. - A $73.45 million sustainability linked loan was secured on December 2, 2021, to finance two newbuilding Suezmaxes, with an outstanding balance of $0.0 million as of December 31, 2021[722]. - An €80 million ($100 million) unsecured revolving credit facility was established on April 7, 2021, with sustainability features, having an outstanding balance of $0.0 million as of December 31, 2021[723]. - The issuance of $200 million senior unsecured bonds was completed on September 2, 2021, with a coupon of 6.25% and maturing in September 2026, used for general corporate purposes and refinancing existing debt[726]. - As of December 31, 2021, the outstanding balance under the unsecured notes was $267.2 million, up from $199.0 million as of December 31, 2020[727]. Strategic Initiatives - The company is exploring a potential stock-for-stock combination with Frontline, with an exchange ratio of 1.45 FRO shares for every EURN share[756]. - The company has provided guarantees totaling $19.8 million to financial institutions for credit facilities related to joint ventures[742]. - As of December 31, 2021, the company was in compliance with all covenants contained in its debt agreements[741]. Geopolitical and Economic Factors - Recent geopolitical developments have contributed to economic instability, potentially affecting the shipping industry[748]. - The company has suspended operations with Russian customers, which represents less than 5% of its turnover[751]. - The price of marine fuels has increased due to self-sanctioning of Russian oil flows, negatively impacting the cost structure of vessels, with bunker fuel costs expected to remain high[752]. - The company anticipates an additional annual crew cost of approximately $500,000 due to difficulties in crew changes amid the conflict[754]. - Cybersecurity risks have increased, prompting the company to implement appropriate mitigating actions[753]. - The company acknowledges the difficulty in estimating the future impact of the Russia-Ukraine conflict on its financial results[755].

Financial Performance - The company incurred increased costs of USD 1.8 million and decreased revenues of USD 4.2 million due to crew change challenges related to COVID-19[549]. - The overall market is expected to become more challenging as crude oil demand is negatively impacted by the COVID-19 pandemic, disrupting the supply-demand balance[551]. - Total shipping revenues increased by 32% to $1,240.9 million in 2020, compared to $942.5 million in 2019, driven by a 33% increase in voyage charter and pool revenues[614]. - The average TCE rates for VLCCs and Suezmax tankers rose to $52,549 and $37,025 per day, respectively, in 2020, compared to $35,678 and $26,542 in 2019[614]. - The net gain on the sale of assets was $22.7 million in 2020, up 54% from $14.8 million in 2019, primarily from the sale of Suezmax Cap Diamant and Finesse[620]. - Time charter revenues increased by 26% to $113.9 million in 2020, compared to $90.3 million in 2019, due to new charters at improved rates[616]. Asset Valuation and Impairment - The company has not recognized any impairment losses as the recoverable amount of each cash generating unit (CGU) continues to exceed the carrying amounts[552]. - The carrying values of vessels are reviewed for impairment, with no impairment required as of December 31, 2020[571]. - As of December 31, 2020, the carrying value of the fleet was $2,865.3 million, down from $3,189.9 million in 2019, reflecting a decrease of approximately 10.2%[585]. - 18 VLCC vessels had carrying values exceeding their market values by approximately $93.5 million as of December 31, 2020, compared to $44.8 million in 2019[585]. - 15 Suezmax vessels had carrying values exceeding their market values by approximately $69.3 million as of December 31, 2020, up from $18.9 million in 2019[586]. Operational Costs and Expenses - The company is subject to various regulatory impacts, including the European Ship Recycling regulation and IMO 2020, which may affect operational costs[545]. - Time charter-in expenses surged by 1,217% to $8.0 million in 2020, attributed to new contracts signed for the Dragon Satu and an internal time charter[623]. - General and administrative expenses decreased by 2% to $65.5 million in 2020, down from $66.9 million in 2019[624]. - Depreciation and amortization expenses fell by 5% to $319.8 million in 2020, compared to $337.7 million in 2019, mainly due to the sale of several vessels[628]. - Voyage expenses decreased by 13% to $(125.4) million in 2020, compared to $(144.7) million in 2019, due to fewer vessels performing spot voyages[618]. Financing and Debt - Total indebtedness decreased from $1,853.0 million in 2019 to $1,375.5 million in 2020[649]. - Available committed secured revolving credit facilities increased from $693.1 million in 2019 to $940.4 million in 2020[646]. - The company entered into a $108.5 million revolving credit facility, which includes a $27.1 million commercial tranche and an $81.4 million K-sure tranche, with outstanding balances of $83.2 million and $90.5 million as of December 31, 2020 and 2019, respectively[659]. - A $173.5 million revolving credit facility was established, consisting of a $69.4 million commercial tranche and a $104.1 million Kexim tranche, with outstanding balances of $143.6 million and $156.9 million as of December 31, 2020 and 2019, respectively[662]. - The company secured a $200.0 million revolving credit facility, which was used to refinance previous debts, with outstanding balances of $55.0 million and $100.0 million as of December 31, 2020 and 2019, respectively[663]. - A $100.0 million senior secured amortizing revolving credit facility was established to finance low sulfur fuel oil inventory, with an outstanding balance of $0 million as of December 31, 2020, down from $70.0 million in 2019[664]. - The company entered into a $700.0 million secured revolving credit facility, with outstanding balances of $345.0 million and $560.0 million as of December 31, 2020 and 2019, respectively[665]. - A $713.0 million sustainability linked loan was established, with an outstanding balance of $185.0 million as of December 31, 2020, aimed at emission reduction targets[666]. - The company issued $150.0 million of senior unsecured bonds with a fixed coupon of 7.50%, and as of December 31, 2020, the outstanding balance was $199.0 million[668][670]. - The company has joint venture credit facilities totaling $220.0 million, with outstanding balances of $90.4 million and $139.2 million as of December 31, 2020 and 2019, respectively[673][674]. Future Outlook and Market Conditions - The company continues to monitor the evolving COVID-19 situation and its potential impact on future financial results[550]. - The company expects continued volatility in market rates for vessels, impacting short- and medium-term liquidity[640]. - A 1% increase in LIBOR would have raised interest expenses by approximately $7.6 million for the year ended December 31, 2020[1005]. - A 10% strengthening of the Euro against the dollar would have decreased profit by $10.4 million as of December 31, 2020[1006]. - Every $1,000 increase in spot tanker freight rates would have increased profit by $19.6 million in 2020[1008]. Fleet and Vessels - The total fleet decreased from 71.0 vessels at the start of 2019 to 69.5 vessels at the end of 2020, with 3.5 vessels disposed of during the year[593]. - The company took delivery of four newbuilding Ice Class Suezmax vessels in 2018, each contracted for seven-year employment contracts with a leading global refinery[595][596][599][600]. - The merger with Gener8 in June 2018 added a fleet of 29 tankers, increasing the company's carrying capacity by approximately 7.4 million dwt[597]. - As of December 31, 2020, there were no vessels classified as non-current assets held for sale, compared to one Suezmax vessel held for sale in 2019[592]. - The company took delivery of four newbuildings in early 2021, each with a deadweight tonnage of 300,200[687]. - The company entered into an agreement to acquire two eco-Suezmax newbuilding contracts for a total price of $113.0 million, with delivery expected in January 2022[689]. - A sale and leaseback agreement for the VLCC Newton was executed for $36.0 million, with a leaseback rate of $22,500 per day[690]. - The tanker orderbook is measured, with VLCCs at 7.0% and Suezmaxes at 8.1% of the current fleet[697].

Market Demand and Economic Impact - The company anticipates a significant decline in global demand for crude oil and refined petroleum products due to the COVID-19 pandemic, which may adversely affect the demand for its vessels and services [599]. - The COVID-19 outbreak has significantly reduced global demand for oil, with Energy Aspects estimating a decrease of 5 million barrels per day in 2020 compared to the previous year [735]. - The outbreak of COVID-19 has caused extreme volatility in global financial markets, impacting the company's earnings and cash flow for 2020 [732]. - The company’s financial condition may be affected by various factors, including the spot rate and time charter market for VLCC and Suezmax tankers, and the number of vessels in its fleet [597]. - The company expects continued volatility in market rates for vessels, impacting short- and medium-term liquidity [688]. Revenue and Financial Performance - Total shipping revenues increased by 56%, or $337.7 million, to $942.5 million for the year ended December 31, 2019, compared to $604.8 million for 2018 [659]. - Voyage charter and pool revenues rose by 60%, or $317.3 million, to $842.1 million for the year ended December 31, 2019, driven by an increase in vessel operating days following the merger with Gener8 [659]. - Time charter revenues increased by 20%, or $15.1 million, to $90.3 million for the year ended December 31, 2019, due to new time charters at improved rates [660]. - Other income surged by 111%, or $5.3 million, to $10.1 million for the year ended December 31, 2019, attributed to improved marine insurance costs and a favorable arbitration claim settlement [661]. - The net gain on sale of assets decreased by 7%, or $1.1 million, to a net gain of $14.8 million for the year ended December 31, 2019, compared to $15.9 million for 2018 [663]. Vessel and Fleet Information - The useful economic life of the company’s vessels is estimated at 20 years, with FSO service vessels having an estimated useful life of 25 years [607]. - The carrying value of the fleet as of December 31, 2019, was $3,189,967,000, down from $3,562,067,000 in 2018, representing a decrease of approximately 10.5% [630]. - The total number of vessels decreased from 68 in 2018 to 65 in 2019, with VLCCs decreasing from 41 to 40 and Suezmaxes from 25 to 24 [630]. - The fleet development included 1 Suezmax acquisition in 2019, while 3 vessels were disposed of, resulting in a total fleet of 71 vessels at the end of 2019 [637]. - The company’s fleet includes advanced, fuel-saving technology vessels acquired through the merger with Gener8, which added 29 tankers to the fleet [642]. Expenses and Financial Charges - Total vessel operating expenses rose by 14%, or $26.0 million, to $211.8 million for the year ended December 31, 2019, compared to $185.8 million for 2018 [668]. - Depreciation and amortization expenses increased by 25%, or $67.0 million, to $337.7 million for the year ended December 31, 2019, primarily due to the acquisition of new vessels and the adoption of IFRS 16 [677]. - Finance expenses increased by 34%, or $30.4 million, to $119.8 million for the year ended December 31, 2019, compared to $89.4 million for 2018 [679]. - Interest expense on financial liabilities increased by 24%, or $16.4 million, for the year ended December 31, 2019, compared to 2018 [680]. - Other financial charges rose by 10%, or $0.7 million, to $7.5 million for the year ended December 31, 2019 [681]. Impairment and Asset Valuation - The company has determined that there were no indicators of impairment for its vessels as of December 31, 2019, and no impairment testing was necessary at that time [616]. - The company has not recorded any impairment for the years ended December 31, 2019, and 2018, despite market value declines [627]. - The carrying values of the company’s vessels may not represent their fair market values due to fluctuations in charter rates and the cost of constructing new vessels [622]. - The estimated market values for vessels are based on independent ship broker assessments, which are inherently uncertain due to market volatility [628]. - The recoverable amount of an asset is assessed as the greater of its fair value less cost of disposal and value in use, with future cash flows discounted to present value using a pre-tax discount rate [621]. Debt and Financing - Total indebtedness decreased to $1,853.0 million as of December 31, 2019, from $1,866.8 million as of December 31, 2018 [695]. - The company entered into a $173.5 million revolving credit facility, with an outstanding balance of $156.9 million as of December 31, 2019 [707]. - The company assumed a $633.0 million Senior Secured Loan facility from Gener8, which was initially for shipbuilding contracts for 15 VLCC newbuildings [708]. - The company repaid $561.6 million of the Senior Secured Loan facility using borrowings from a new $700.0 million Senior Secured Credit Facility [709]. - The company has outstanding joint venture loans of $139.2 million as of December 31, 2019, with guarantees amounting to $69.6 million [728]. Regulatory and Compliance Issues - The company expects that the European Ship Recycling regulation and IMO 2020 will impact its operations starting January 1, 2019, and January 1, 2020, respectively [597]. - The company maintains compliance with all covenants in its debt agreements as of December 31, 2019 [729]. - The company has provided guarantees to financial institutions for credit facilities to joint ventures, totaling $69.6 million [730]. Operational Challenges - The company’s operational disruptions may arise from worker health risks and new regulations due to the pandemic, potentially affecting loading and discharging of cargo [599]. - Approximately 12.5% of total operating expenses were incurred in euros in 2019, with a 10% strengthening of the euro against the dollar potentially decreasing profit by $10 million [999]. - A significant portion of the company's vessels are exposed to the spot market, where a $1,000 increase in daily freight rates would have increased profit by $22.6 million in 2019 [1001]. - The supply of tankers is influenced by new deliveries and removals, with 2019 seeing 13 VLCCs and 6 Suezmaxes removed from the trading fleet [738]. - The company employs a strategy of time charters for some vessels, providing fixed income for a pre-set period [739].

PART I [Identity of Directors, Senior Management and Advisers](index=7&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20ADVISERS) This section is not applicable as per the report - The report states that this item is not applicable[28](index=28&type=chunk) [Offer Statistics and Expected Timetable](index=7&type=section&id=ITEM%202.%20OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE) This section is not applicable as per the report - The report states that this item is not applicable[29](index=29&type=chunk) [Key Information](index=7&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section provides selected consolidated financial and operating data for the five years ended December 31, 2018, and outlines significant risks associated with the company's industry, operations, and recent merger [Selected Financial Data](index=7&type=section&id=A.%20Selected%20Financial%20Data) The company's financial performance shows significant volatility, with a net loss of **$110.1 million** in 2018 compared to a profit of **$1.4 million** in 2017, reflecting a challenging tanker market and the impact of the Gener8 merger Consolidated Statement of Profit or Loss Data (2014-2018) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue (USD thousands)** | 600,024 | 513,368 | 684,265 | 846,507 | 473,985 | | **Result from operating activities (USD thousands)** | (74,578) | 13,406 | 208,220 | 351,972 | 11,527 | | **Profit (loss) for the period (USD thousands)** | (110,070) | 1,383 | 204,049 | 350,301 | (45,797) | | **Basic earnings per share (USD)** | (0.57) | 0.01 | 1.29 | 2.25 | (0.39) | | **Dividends per share declared (USD)** | 0.12 | 0.12 | 0.77 | 1.69 | — | Consolidated Statement of Financial Position Data (at Period End) | Indicator | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Total assets (USD thousands)** | 4,127,351 | 2,810,973 | 3,046,911 | | **Total bank loans (USD thousands)** | 1,560,002 | 701,091 | 1,085,562 | | **Total equity (USD thousands)** | 2,260,523 | 1,846,361 | 1,887,956 | Fleet Operational Data (2018 vs 2017) | Vessel Type | Metric | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **VLCCs** | Average number of vessels | 38 | 31 | | | Daily TCE charter rates (USD) | 24,073 | 29,827 | | **Suezmaxes** | Average number of vessels | 23 | 19 | | | Daily TCE charter rates (USD) | 17,557 | 19,144 | EBITDA and Adjusted EBITDA (Unaudited) | Metric (USD thousands) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **EBITDA** | 231,513 | 273,452 | 475,005 | | **Adjusted EBITDA** | 254,816 | 294,467 | 503,453 | [Risk Factors](index=12&type=section&id=D.%20Risk%20Factors) This section details numerous risks facing the company, categorized into industry-wide, company-specific, merger-related, and investment-related risks [Information on the Company](index=44&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of Euronav, detailing its history, business operations, fleet composition, chartering strategy, and the competitive and regulatory landscape [History and Development of the Company](index=44&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Euronav NV, incorporated in Belgium in 2003, became a leading independent crude tanker operator following its merger with Gener8 Maritime Inc. on June 12, 2018 - The merger with Gener8 Maritime Inc. closed on June 12, 2018, making Gener8 a wholly-owned subsidiary and establishing Euronav as a leading global independent crude tanker operator[293](index=293&type=chunk)[294](index=294&type=chunk) - The company's ordinary shares are listed on both the NYSE and Euronext Brussels under the ticker symbol "**EURN**"[292](index=292&type=chunk) [Business Overview](index=44&type=section&id=B.%20Business%20Overview) Euronav is an integrated provider of international crude oil shipping and storage, operating a modern fleet of primarily VLCC and Suezmax tankers with a mixed chartering strategy - As of April 15, 2019, Euronav owned or operated a modern fleet of **74 vessels**, including **43 VLCCs**, **2 V-plus vessels**, **27 Suezmax vessels**, and **2 FSO vessels** (owned through 50/50 joint ventures)[296](index=296&type=chunk) - The company pursues a mixed chartering strategy, employing vessels on the spot market (including **42 vessels** in the TI Pool), on long-term charters (**5 vessels**), and long-term FSO service contracts (**2 vessels**) as of April 15, 2019[298](index=298&type=chunk) - Key 2018 corporate activities included the merger with Gener8, the sale of **six VLCCs** to International Seaways for **$434 million**, the acquisition of the V-Plus vessel 'Oceania', and the delivery of **four newbuild Suezmax vessels**, which commenced seven-year time charters[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[307](index=307&type=chunk) [Organizational Structure](index=87&type=section&id=C.%20Organizational%20Structure) Euronav NV is a Belgian company that owns its vessel fleet directly, through wholly-owned subsidiaries, or through 50%-owned joint ventures, with subsidiaries and vessels flagged across various jurisdictions - The company owns its vessels directly at the parent level, through wholly-owned subsidiaries, or jointly through 50%-owned subsidiaries[552](index=552&type=chunk) - Vessels are flagged in Belgium, the Marshall Islands, France, Panama, Liberia, and Greece[552](index=552&type=chunk) [Property, Plants and Equipment](index=87&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company's primary assets are its vessels, and it leases office space in key locations rather than owning real estate property - The company owns no properties other than its vessels and leases office space in various jurisdictions[554](index=554&type=chunk) [Operating and Financial Review and Prospects](index=87&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial condition and results of operations, detailing factors affecting performance, critical accounting policies, liquidity, capital resources, and market trends [Operating Results](index=99&type=section&id=A.%20Operating%20Results) The operating results show a significant downturn in 2018, with a net loss of **$110.1 million**, driven by higher expenses following the Gener8 merger and lower charter rates Operating Results Comparison (2018 vs. 2017) | Metric (USD thousands) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | **Total shipping revenues** | 604,799 | 518,270 | 17% | | **Voyage expenses and commissions** | (141,416) | (62,035) | 128% | | **Vessel operating expenses** | (185,790) | (150,427) | 24% | | **General and administrative expenses** | (66,232) | (46,868) | 41% | | **Net finance expenses** | (74,389) | (43,463) | 71% | | **Profit (Loss) for the period** | (110,070) | 1,383 | N/A | - The increase in general and administrative expenses in 2018 was mainly due to the Gener8 merger, including an **$8.9 million** increase in staff costs (due to higher FTE count and severance payments) and a **$7.4 million** increase in legal and other fees[653](index=653&type=chunk) [Liquidity and Capital Resources](index=106&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is managed through cash from operations and extensive credit facilities, with total indebtedness surging to **$1.87 billion** in 2018 due to the Gener8 merger, while remaining compliant with financial covenants Liquidity and Indebtedness (as of Dec 31) | Metric (USD millions) | 2018 | 2017 | | :--- | :--- | :--- | | **Cash and cash equivalents** | 173.1 | 143.6 | | **Total Indebtedness** | 1,866.8 | 964.6 | | **Available committed secured revolving credit facilities** | 438.9 | 547.4 | - Net cash from operating activities dropped significantly to **$0.8 million** in 2018 from **$211.3 million** in 2017, reflecting challenging market conditions[702](index=702&type=chunk) - The company's debt agreements contain financial covenants requiring it to maintain minimum liquidity (e.g., at least **$50.0 million** or **5% of total debt**), a minimum cash balance (**$30.0 million**), and a ratio of stockholders' equity to total assets of at least **30%**, with which the company was in compliance as of December 31, 2018[729](index=729&type=chunk)[736](index=736&type=chunk) [Trend Information](index=112&type=section&id=D.%20Trend%20information) The tanker market outlook is influenced by strong global oil demand growth, increasing voyage distances, and expected moderation of vessel supply due to high scrapping rates driven by upcoming regulatory changes - Global oil demand growth is forecasted to be strong at **1.42 million barrels per day** in 2019[740](index=740&type=chunk) - A key trend boosting tanker demand is the increase in long-haul trades, such as crude exports from the US Gulf to China and the Far East[741](index=741&type=chunk) - Vessel supply growth is expected to be tempered by continued high levels of scrapping, encouraged by upcoming costly regulatory requirements like the Ballast Water Management convention and IMO 2020 sulfur cap[742](index=742&type=chunk) [Contractual Obligations](index=113&type=section&id=F.%20Tabular%20disclosure%20of%20contractual%20obligations) As of December 31, 2018, the company had total contractual obligations of **$1.90 billion**, primarily related to long-term bank loan facilities with significant payments scheduled over the next five years Contractual Obligations as of December 31, 2018 (USD thousands) | Obligation Type | Total | 2019 | 2020 | 2021 | 2022 | 2023+ | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Long-term bank loan facilities** | 1,572,467 | 138,537 | 157,693 | 273,332 | 340,807 | 662,098 | | **Long-term debt obligations** | 150,000 | — | — | — | 150,000 | — | | **Operating leases (vessels)** | 95,524 | 32,120 | 32,208 | 31,196 | — | — | | **Total Contractual Obligations** | **1,903,112** | **235,212** | **194,442** | **308,691** | **494,696** | **670,071** | [Directors, Senior Management and Employees](index=114&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides details on the company's leadership, compensation, board structure, and employees, highlighting a key leadership transition and the total employee count of approximately **2,900** at year-end 2018 [Directors and Senior Management](index=114&type=section&id=A.%20Directors%20and%20Senior%20Management) The report lists the members of the Board of Directors and Executive Officers, noting a significant upcoming CEO transition from Patrick Rodgers to Hugo De Stoop in the second quarter of 2019 - A leadership transition is underway, with CEO Patrick Rodgers set to step down in Q2 2019 and be succeeded by CFO Hugo De Stoop[752](index=752&type=chunk)[761](index=761&type=chunk)[762](index=762&type=chunk) [Compensation](index=117&type=section&id=B.%20Compensation) For the year ended December 31, 2018, aggregate compensation for executive officers (excluding the CEO) was **EUR 2.09 million**, while the CEO's compensation was **EUR 2.58 million**, and non-executive directors received **EUR 1.03 million** 2018 Compensation Summary | Recipient Group | Compensation (EUR) | | :--- | :--- | | **Executive Officers (excl. CEO)** | 2,085,700 | | **Chief Executive Officer (CEO)** | 2,581,831 | | **Non-Executive Directors** | 1,034,583 | [Board Practices](index=117&type=section&id=C.%20Board%20Practices) The Board of Directors consists of seven members, five of whom are independent, and has established three key committees: Audit and Risk, Corporate Governance and Nomination, and Remuneration - The Board of Directors has **seven members**, with **five** being independent[771](index=771&type=chunk) - Key board committees include the Audit and Risk Committee, Corporate Governance and Nomination Committee, and Remuneration Committee[771](index=771&type=chunk) [Employees](index=118&type=section&id=D.%20Employees) As of December 31, 2018, Euronav employed approximately **2,900** people, comprising around **200** onshore staff and **2,700** seagoing officers and crew members - The company employed approximately **2,900 people** at the end of 2018, comprising **~200 onshore employees** and **~2,700 seagoing personnel**[774](index=774&type=chunk) [Share Ownership and Equity Incentive Plans](index=118&type=section&id=E.%20Share%20ownership) This subsection details various equity incentive plans for key management and employees, including stock option plans, Long-Term Incentive Plans (LTIPs) with options and Restricted Stock Units (RSUs), and a transaction-based incentive plan related to the Gener8 merger - The company has multiple share-based payment arrangements, including a 2013 stock option plan and Long-Term Incentive Plans (LTIPs) for 2015, 2016, 2017, and 2018[775](index=775&type=chunk)[778](index=778&type=chunk)[780](index=780&type=chunk)[782](index=782&type=chunk)[785](index=785&type=chunk) - A transaction-based incentive plan with **1,200,000 phantom stock units** was granted to key employees, with vesting tied to achieving specific share price targets ranging from **$12 to $18**[787](index=787&type=chunk) [Major Shareholders and Related Party Transactions](index=121&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS.) This section identifies the company's major shareholders and describes transactions with related parties, including joint venture loan agreements, guarantees, and office leases with affiliated entities [Major Shareholders](index=121&type=section&id=A.%20Major%20shareholders.) As of April 15, 2019, the company's major shareholders included Châteauban SA with an **8.39%** stake and Mr. Marc Saverys with a **6.97%** stake, while the company itself held **1.53%** as treasury shares Major Shareholders as of April 15, 2019 | Shareholder | Percentage Ownership | | :--- | :--- | | **Châteauban SA** | 8.39% | | **Mr. Marc Saverys** | 6.97% | | **Euronav (treasury shares)** | 1.53% | [Related Party Transactions](index=121&type=section&id=B.%20Related%20party%20transactions.) The company engages in transactions with related parties, including its joint ventures and entities affiliated with major shareholders, such as providing guarantees for credit facilities and leasing office space - The company subleases office space in London to Tankers (UK) Agencies Limited, a joint venture with International Seaways (INSW)[801](index=801&type=chunk) - Euronav leases its office space in Belgium from Reslea N.V., an entity jointly controlled by CMB (an affiliate of a major shareholder) and Exmar[1574](index=1574&type=chunk) [Financial Information](index=122&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section refers to the detailed consolidated financial statements provided in Item 18, confirms no significant legal proceedings are underway, and outlines the company's capital allocation and dividend policy [Consolidated Statements and Other Financial Information](index=122&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) This subsection states that the company is not involved in any significant legal proceedings and details its dividend policy, which targets a minimum fixed dividend of at least **$0.12 per share** per year - The company is not involved in any legal proceedings expected to have a significant effect on its business or financial position[804](index=804&type=chunk) - The current dividend policy is to pay a minimum fixed dividend of at least **$0.12 per share** per year, subject to Board discretion based on financial health and earnings visibility[808](index=808&type=chunk)[811](index=811&type=chunk) - Additional income beyond the fixed dividend may be allocated to further cash dividends, share buybacks, accelerated debt amortization, or accretive vessel acquisitions[808](index=808&type=chunk)[811](index=811&type=chunk) [Offer and The Listing](index=123&type=section&id=ITEM%209.%20OFFER%20AND%20THE%20LISTING) This section provides details about the company's share capital and the markets where its shares are traded, specifically the Euronext Brussels and the New York Stock Exchange (NYSE) - The company's ordinary shares trade on the NYSE and Euronext Brussels under the symbol "**EURN**"[818](index=818&type=chunk)[821](index=821&type=chunk) - As of April 15, 2019, the company had **220,024,713 ordinary shares** outstanding[817](index=817&type=chunk) [Additional Information](index=124&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section covers key corporate information, including a summary of the Articles of Association, material contracts, exchange controls, and a detailed discussion of U.S. and Belgian tax considerations [Memorandum and Articles of Association](index=124&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association.) Euronav is a public limited liability company under Belgian law, with its Articles of Association outlining corporate purpose, director terms, shareholder meeting requirements, preferential subscription rights, and certain anti-takeover provisions - The company is a public limited liability company (naamloze vennootschap / société anonyme) incorporated under Belgian law[827](index=827&type=chunk) - Existing shareholders have a preferential right to subscribe to new shares, convertible bonds, or warrants in the event of a capital increase for cash, though this right can be limited or canceled by the company[849](index=849&type=chunk)[850](index=850&type=chunk) - The Articles of Association contain anti-takeover provisions, including the Board of Directors' authorization to increase the company's capital or buy back its own shares[855](index=855&type=chunk)[856](index=856&type=chunk) [Material Contracts](index=127&type=section&id=C.%20Material%20contracts.) The company entered into a registration rights agreement on January 28, 2015, with affiliates of former Chairman Peter Livanos and current shareholder Marc Saverys, granting them demand and piggyback registration rights for their ordinary shares - A registration rights agreement from January 2015 provides major shareholders (Ceres and Saverco affiliates) with the right to require the company to file registration statements for the sale of their shares[860](index=860&type=chunk)[861](index=861&type=chunk) [Taxation](index=127&type=section&id=E.%20Taxation.) This section analyzes the material U.S. federal and Belgian income tax consequences, noting Euronav expects to be exempt from U.S. federal income tax on its U.S.-source shipping income and operates under the Belgian tonnage tax regime - The company expects to be exempt from U.S. federal income tax on its U.S.-source shipping income, relying on the U.S.-Belgium income tax treaty or Section 883 of the U.S. Internal Revenue Code[869](index=869&type=chunk)[870](index=870&type=chunk) - The company does not believe it will be treated as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, based on its position that income from chartering activities constitutes services income, not passive rental income[897](index=897&type=chunk) - Dividends are generally subject to a **30% Belgian withholding tax**, although this rate can be reduced to **15%**, **5%**, or **0%** for qualifying U.S. taxpayers under the U.S.-Belgium Tax Treaty[917](index=917&type=chunk)[921](index=921&type=chunk) - The company's taxable income in Belgium is determined on a lump-sum basis under the Belgian tonnage tax regime, rather than on its accounting results[982](index=982&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=144&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to interest rate, currency, credit, and significant tanker market risks; a one percentage point increase in LIBOR would have increased 2018 interest expense by approximately **$8.5 million**, while a **$1,000 per day** change in spot tanker rates would have impacted profit or loss by **$19.3 million** - A one percentage point increase in LIBOR would have increased the company's interest expense for the year ended December 31, 2018, by approximately **$8.5 million**[999](index=999&type=chunk) - The company is exposed to currency risk as about **12.8%** of its total operating expenses in 2018 were incurred in Euros; a **10% strengthening** of the Euro against the USD would have decreased profit by **$7.9 million**[1000](index=1000&type=chunk) - The company has significant exposure to tanker market volatility; a **$1,000 per day** change in spot tanker freight rates for its VLCC and Suezmax fleet would have impacted the 2018 profit or loss by **$19.3 million**[1002](index=1002&type=chunk) [Controls and Procedures](index=144&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2018, with the assessment of internal controls excluding the recently acquired Gener8 Maritime Inc. - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2018[1008](index=1008&type=chunk) - Management assessed the company's internal controls over financial reporting as effective as of December 31, 2018; this assessment excluded the internal controls of Gener8 Maritime Inc., which was acquired during 2018[1010](index=1010&type=chunk)[1073](index=1073&type=chunk) - There were no material changes in internal controls over financial reporting during the period covered by the annual report[1012](index=1012&type=chunk) [Corporate Governance and Other Information](index=145&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Information) This section covers various corporate governance and disclosure items, including audit committee financial expert identification, code of ethics adoption, fees paid to the principal accountant, equity securities repurchased, and differences between Belgian and NYSE corporate governance practices [Principal Accounting Fees and Services](index=146&type=section&id=16C.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) The company's principal accountant is KPMG, and total fees paid to KPMG for 2018 amounted to **$1.34 million**, a significant increase from **$900,415** in 2017 Fees Paid to Principal Accountant (KPMG) | Fee Type (in U.S. dollars) | 2018 | 2017 | | :--- | :--- | :--- | | **Audit fees** | 1,006,077 | 870,324 | | **Audit-related fees** | 313,180 | 7,987 | | **Taxation fees** | 6,180 | 22,104 | | **All other fees** | 10,076 | — | | **Total** | **1,335,513** | **900,415** | [Purchases of Equity Securities by the Issuer](index=146&type=section&id=16E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASES) In December 2018, the company repurchased a total of **545,486** of its own shares for approximately **$3.96 million** on the open market - The company repurchased **545,486** of its own shares in December 2018 for a total price of **$3,955,376**[1022](index=1022&type=chunk) [Corporate Governance](index=147&type=section&id=16G.%20CORPORATE%20GOVERNANCE) As a Belgian foreign private issuer, Euronav follows Belgian corporate governance practices, which differ from NYSE standards for U.S. companies in areas such as director independence and shareholder approval for securities issuances - As a foreign private issuer, the company follows Belgian corporate governance practices, which differ from NYSE listing standards for U.S. companies[1025](index=1025&type=chunk) - Key differences include director independence standards for certain committees (excluding the Audit Committee, which is compliant with U.S. rules), shareholder approval for securities issuances, and proxy solicitation rules[1026](index=1026&type=chunk)[1027](index=1027&type=chunk)[1028](index=1028&type=chunk)[1030](index=1030&type=chunk) [Financial Statements](index=148&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements for the years ended December 31, 2018, 2017, and 2016, prepared in accordance with IFRS, including the independent auditor's report and detailed notes [Consolidated Financial Statements](index=158&type=section&id=Consolidated%20Financial%20Statements) The audited consolidated financial statements present the company's financial position, performance, and cash flows, reflecting total assets of **$4.13 billion** and a net loss of **$110.1 million** in 2018, significantly impacted by the Gener8 merger Consolidated Statement of Financial Position (as of Dec 31) | (USD thousands) | 2018 | 2017 | | :--- | :--- | :--- | | **Total Assets** | 4,127,351 | 2,810,973 | | **Total Equity** | 2,260,523 | 1,846,361 | | **Total Liabilities** | 1,866,828 | 964,612 | Consolidated Statement of Profit or Loss (Year Ended Dec 31) | (USD thousands) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Revenue** | 600,024 | 513,368 | 684,265 | | **Result from Operating Activities** | (74,578) | 13,406 | 208,220 | | **Profit (Loss) for the Period** | (110,070) | 1,383 | 204,049 | Consolidated Statement of Cash Flows (Year Ended Dec 31) | (USD thousands) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net cash from operating activities** | 841 | 211,295 | 438,202 | | **Net cash from investing activities** | 190,042 | (40,242) | (100,615) | | **Net cash from financing activities** | (160,165) | (234,976) | (261,160) | [Notes to the Consolidated Financial Statements](index=167&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial figures, covering IFRS adoption, segment reporting, the Gener8 business combination resulting in a bargain purchase gain, and details on debt facilities and share-based payment plans - The company adopted IFRS 15 (Revenue) and IFRS 9 (Financial Instruments) on January 1, 2018; the primary impact of IFRS 15 was changing revenue recognition for spot voyages from a discharge-to-discharge to a load-to-discharge basis[1113](index=1113&type=chunk)[1132](index=1132&type=chunk)[1138](index=1138&type=chunk) - The merger with Gener8 Maritime Inc. on June 12, 2018, was accounted for as a business combination; the fair value of net assets acquired (**$576.5 million**) exceeded the consideration transferred (**$553.4 million**), resulting in a bargain purchase gain of **$23.1 million**[1624](index=1624&type=chunk)[1632](index=1632&type=chunk)[1638](index=1638&type=chunk) - The company's two main operating segments are Tankers and FSO; the Tankers segment generated **$600.0 million** in revenue in 2018, while the FSO segment (proportionally consolidated for segment reporting) generated **$49.2 million**[1329](index=1329&type=chunk)[1336](index=1336&type=chunk)